UBS Sees Sustained AI Demand After Meta, Microsoft, and Alphabet Earnings

UBS believes the latest quarterly results from Meta, Microsoft, and Alphabet signal that demand for artificial intelligence (AI) remains strong and is likely to drive further equity performance in the coming months.

The three companies, which together hold a market capitalization of more than $9 trillion, all reported solid third-quarter earnings, according to UBS’s Chief Investment Office in a note on Thursday. 

Despite Meta and Microsoft shares dipping in after-hours trading on concerns about margins and cloud growth, UBS stated that the results “are positive for the structural growth of artificial intelligence (AI), as all three companies flagged a substantial increase in capital expenditures (capex) amid broad-based demand for AI and its infrastructure.”

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UBS highlighted that Alphabet raised its full-year 2025 capex guidance, forecasting a “significant increase” in 2026, while Microsoft expects a 45% jump in capex next year as it seeks to expand its total AI capacity by more than 80%. 

Meta, meanwhile, also reported higher investment growth plans. 

UBS wrote, “Strong AI spending has been the biggest driver of AI performance so far, and the positive capex outlook should continue to underpin the AI-led rally over the next 6–12 months.”

The bank also pointed to ongoing compute shortages as a tailwind for chipmakers, noting that “Microsoft said a shortage of compute capacity restrained the revenue growth of its cloud business, while Meta suggested that its compute needs have continued to exceed its own expectations.”

UBS concluded that “the monetization potential for AI is large,” estimating an annual AI revenue opportunity of $1.5 trillion globally, and reiterated its call for investors to add exposure to AI-related stocks through a diversified approach.